Franchisors, Franchisees & Finance...Changing Times in Hospitality
Updated: Oct 27
Much has been written in recent press about the increasing level of involvement and influence that the hedge fund and private equity players are having on the hospitality industry. The headline in Banking & Finance Real Estate Weekly February 4, 2015 edition reads “Hospitality sector enjoying hot streak”; Forbes speaks to “The New Hotel Tycoons: Why Private Equity Loves The Lodging Industry”; Nitan Shah shares his Opinion in the January 2015 issue of Hotel Business discussing the changing ownership structure between franchisor and franchisee and where finance fits into the structure. Finally, Boutique Design posted that their BDWest conference in April will include a series of panels focused on educating designers on how to speak the language of finance.
Diverse People at the Table
As professionals in the hotel design industry we welcome this news, but it does seat a bunch of diverse people at the table in evolving roles from three broad categories: Franchisors, Franchisees and Finance. Why are hotel design professionals so important in ways common to all parties involved? In summary, it is in the best interest of all the “F” people at the table to work with professionals who deliver a cost efficient, unique design concept that is then carried out through intelligent purchasing services so that everyone benefits.
Increasing RevPAR and ROI
While there is no doubt that Wall Street pressure to perform trickles down through all levels, the goals of remaining competitive and increasing RevPAR and ROI are shared by everyone in the process...including design and purchasing professionals. What we all need to embrace and appreciate is that everyone adds value in a different way to reach the same goals. Maximize that value and you maximize the outcome.
Relationships For the Long Term
Private Equity has always embraced the power of turning to experts in their business model; bring in people who are experts in that business and the business will be better for it. As Principals in the hotel design and purchasing industry who also bring decades of corporate experience working for big banks and hedge funds, we understand better than most in our field the pressure of financial performance and our value added is significant. Our design and purchasing business has been built over the last 23 years based on relationships, outstanding service and the understanding that money matters to everyone in the process. Yes, hospitality is a people business, but so is banking and we all serve as important advisors to our respective clients and can do the same for one another.
It is in being able to deal with the pressure, find creative solutions in finance, design, purchasing and hospitality services where we will all find success for the most important “F”’s… Friends and Family who get to enjoy the results.